Q3 2021 Credit Newsletter: A League of Their Own: Why Are Private Debt Firms Lacking in Diversity and Failing to Measure Up to Demands?
Earlier this year, Jensen Partners published the first installment in a series of data-driven articles analyzing systemic challenges in diversity recruiting within the credit space. We wrote about how private debt managers are under immense pressure to recruit and hire a more diverse and inclusive workforce as diversity, equity, and inclusion (DEI) rose up the agenda of private market LPs and GPs.
In a sign of just how important DEI has become to the success of any investment business, the Institutional Limited Partners Association (ILPA), a group that includes more than 550 institutional investors representing over $2 trillion of private equity assets under management (AUM), recently revised its due diligence questionnaire (DDQ) and diversity metrics template by adding 12 questions to the DEI section of the due diligence forms. According to ILPA, the updated version features more globally relevant designations for race and ethnicity, as well as more inclusive information on gender/diversity such as the addition of a nonbinary designation. ILPA also encourages LPs to ask GPs questions about their willingness to implement DEI policies, the presence of a code of conduct that covers harassment, discrimination, and violence in the workplace, and the implementation of policies designed to recruit and retain staff from underrepresented groups. Thanks to the efforts of ILPA and other industry associations, it's clear that DEI is moving from a nice-to-have to a must-have for investment management firms. (FYI, ILPA’s Due Diligence Questionnaire is open for a public comment period through September 24, 2021.)
Lack of Female and Black and Hispanic/Latinx Representation
In the first part of our DEI series, Jensen Partners looked at 1,860 investment credit professionals—categorized according to their ethnicity, gender, and seniority—working at the top 20 private debt firms that collectively managed $3.5 trillion in assets. We found a significant lack of representation of Black and Hispanic/Latinx professionals among investment credit professionals, both in junior and senior roles. In this second part of the series, we analyzed the 253 investment credit professionals working at 50 private debt firms, representing $557.6 billion in total leveraged loan AUM. We found a similar trend in the diversity of investment credit committee professionals, which were predominantly male and Caucasian. (See the two charts below.)
Here are additional key takeaways from our analysis of the 253 investment credit committee professionals:
- Caucasians make up the vast majority (83.40%) of investment credit committee professionals. The only three ethnic minorities with decent representation relative to the population are South Asian (4.26%), Middle Eastern (2.98%), and East Asian (2.13%). There is little representation among Black (0.43%) and Hispanic/Latinx (1.28%) professionals. This is similar to the results from our earlier DEI analysis, where representation among Black and Hispanic/Latinx professionals was 0.5% and 1.2% respectively, suggesting a lack of improvement in addressing the systemic challenges of diversity recruitment and retention.
- In terms of gender, we found that women represent only 7.11% (or 18 of 253 professionals), which is an unusually low number given that women generally make up 40-50% of marketing professionals across the alternative investment industry. Of the 18 women, the majority (83.33%) identify as Caucasian, whereas 11.11% identify as East Asian. There weren’t any female investment credit committee professionals who identified as Black, Hispanic, Middle Eastern, or South Asian. In our previous DEI analysis, women represented 16.1% (or 299) of investment credit professionals, within which only 4.35% identified as women of color.
- In terms of region, our data shows that North America is leading the way, representing 82.28% of all hires, followed by the UK (13.78%) and the rest of Europe (3.94%). Based on our analysis, there weren’t any hires in the APAC region.
Adressing the Diversity Issues in the Private Debt Industry
While the entire alternative investment industry is still grappling with how to respond to demands for progress on DEI, it is clear that the private debt industry is in a league of its own. Our analysis shows that private debt firms (as a whole) are less diverse than other types of alts firms. There could be a number of reasons for this disparity. The likeliest reason is that credit firms operate in niche financial markets that are comparatively even more insular than the hedge fund or private equity industries, for example. This makes it harder for diverse talent to break into the credit industry, while the few that do break in face additional obstacles in trying to move up the ranks.
Recent efforts by ILPA and other industry associations to put DEI on the agenda for all fund managers have cast a scathing spotlight on the parts of the alternative investment universe that are slowest to change. Credit firms that want to stand out for the right reasons should consider taking the following steps:
- Collect data on the diversity of the organization, with specific metrics on race, gender and ethnicity at a minimum
- Appoint a point person to help lead and integrate DEI efforts across the organization, ideally someone who is already a part of senior leadership
- Interview current and former employees to better understand the opportunities and challenges the firm faces in recruiting and retaining a diverse workforce
- Measure and report on any DEI progress to both LPs and employees to ensure a measure of accountability
- Participate in industry-wide initiatives aimed at increasing the diversity of the financial industry (e.g., launching mentorship programs or doing campus recruiting outside of the usual targets)
We will continue conducting these types of analyses and sharing our insights as part of our mission to help make the alternative investment universe more diverse and inclusive. We look forward to reporting on our progress and sharing additional insights in future newsletters.
Sasha Jensen, CEO & Founder
News Articles on Credit + Diversity
Here is a selection of recent articles about diversity in the private and structured credit space:
CityWire Selector: Women in finance still underrepresented in senior roles, study shows
Financial Investment News: Institutional Investors See Some Progress In Journey To Address DEI
FundFire: CFA Institute Proposes Code for Diversity, Equity and Inclusion
FundFire: Wealth, Asset Mgmt Leaders Overestimate Firm Diversity Performance: Report
New Private Markets: DEI in private markets: the state of play
New Private Markets: LPs step up the pressure for GPs to make real progress in diversity
Pensions & Investments: Women still underrepresented in institutional management
Pensions & Investments: Investors press companies on DEI
Pensions & Investments: Money managers get serious on DEI efforts
Pensions & Investments: Preqin: Alts industry showing some progress on gender equality
Pensions & Investments: Diversity Equity and Inclusion Debunking the Myths
Pensions & Investments: CFA Institute finds DEI measures taking hold
Private Debt Investor: Investors turn the diversity spotlight on debt
Private Debt Investor: Gender Equality: Five ways private funds are making progress
Recent Credit Moves
Here is a selection of recent marketing moves and promotions specific to the Credit space. Moves are listed in alphabetical order by last name.
❖ Soumen Bose joined Morgan Stanley in August 2021 as an Executive Director, CLO Structuring. He was previously at Goldman Sachs for six years, most recently as a Vice President.
❖ Joe Cantwell transitioned to Alcentra in New York, where he is Co-Chief Investment Officer for Liquid Credit in September 2021. He was previously at MacKay Shields as the Head of Corporate Credit and Co-Head of Global Fixed Income. He was responsible for $28 Billion of corporate credit investments across US high yield, global high yield, low duration high yield, bank loan, investment-grade corporate, and multi-sector products.
❖ Harry Choulilitsas joined Natixis in August 2021 as Vice President - Structured Credit Syndication Europe + the UK. He was previously at Mediobanca as a Structured Credit Trader for two years. He is based in London, England.
❖ Joseph DiCecilia joined Octagon Credit Investors New York as Vice President in September 2021. He was previously at J.P. Morgan for ten years, most recently as a Vice President focused on CLO Trading.
❖ Tyron Eng joined Standard Chartered Bank in August 2021 as Global Credit CLO Trading. Before Standard, Eng was at K.N.G. as Head of Global CLOs: Sales and Trading for two years. He is based in London, England.
❖ Michael Feeney, Head of Leveraged Loans with Morgan Stanley Investment Management, has left the firm recently as MSIM is being merged with Eaton Vance.
❖ Antonio Garasto transitioned to Mediobanca, where he is a CLO and ABS Trader in Milan, Italy. He joined the firm in September 2021. Garasto was previously with Bank Of America Merril Lynch for almost two years as a CLO Strategist focused on Structured Credit & ABS Research in London.
❖ Eric Glyck was poached by Octagon Credit Investors New York Office to be Head of CLO Structuring in September 2021. He was previously at Barclays, in the same capacity, as a Head of CLO Structuring for four years. Before Barclays, Glyck was at Goldman Sachs for eight years as an investment banking analyst, then promoted to vice president.
❖ Anthony Han joined Capital Four in September 2021. He will work out of the New York office, focusing on Healthcare Industrials and Technology.
❖ Joe Hare left H.I.G. Capital where he spent the last five years, most recently as Director and European Asset Manager. He joined the Intrivia Capital London office in August 2021 as a senior asset manager.
❖ Michael Kinahan is set to take charge of CLOS for Morgan Stanley Investment Management. Kinahan was previously Head of Structured Products with Eaton Vance. Based in Boston, he has been with the firm since 1998. His start date is TBD.
❖ Vincent Lu joined J.P. Morgan Asset Management in August 2021 as Managing Director and Co-Head of Global Performing Credit from Wells Fargo Asset Management, where he was Co-Head of Private Strategies.
❖ Austin Nelson will transition to the Capital Four New York Office in September 2021, where he will be a part of the US Credit team. He was previously at AIG Asset Management for five years. Most recently, as a Senior High Yield Credit Analyst specializing in healthcare/pharmaceuticals, health insurance, chemicals, and paper packaging industries.
❖ Dan Norman joined Lakemore Partners in August 2021 after retiring from Voya Investment Management in December 2020. Norman’s role is Managing Director and Head of U.S. Business Operations, where he is focused on growing the global investment platform at Lakemore. He is based in Scottsdale, Arizona. In Norman’s previous role at Voya, he was the Group Head and Senior Managing Director. (Source: Lakemore Partners)
❖ Andrew Petitjean will be promoted to Lead CLO Portfolio Manager at Brigade after Jared Worman leaves in September 2021. Petitjean has been with the firm for over two years as a Portfolio Manager. Before Brigade, he spent nine years as a Senior Analyst/Head of Credit Research at Kingdon Capital.
❖ Ervin Pilku joined East West Bank in August 2021 as a Managing Director focusing on capital markets and trading. He has vast experience in CLO trading at firms such as Odeon Capital Group, where he was Senior Vice President/CLO Trading, in addition to roles at Guggenheim Partners, Cantor Fitzgerald, Braver Stern & Co., and others.
❖ Kate Rubenstein will move from portfolio operations to COO of BCRED and BXSL at Blackstone. Her new role began in July 2021 as Managing Director & COO, Blackstone Private Credit Fund and Blackstone Secured Lending Fund in New York. Rubenstein has been with the firm for almost seven years in various capacities, from Principal - GSO Capital to Managing Director. Before Blackstone, she was at GE Capital for eight years.
❖ Jeffrey Scott joined Fidelity Investments in August 2021 as Managing Director, Direct Lending Team. He will be responsible for originating, structuring, and managing flexible credit facilities for sponsor backed companies. Before Fidelity, Scott was a Managing Director at Madison Capital Funding.
❖ Robert Seda left his role as Portfolio Manager at ArrowMark in August 2021. His new role has not been announced yet. Before ArrowMark, Seda was most recently Director at M.J.X. Asset Management. He is based in New York.
❖ Chris Sullivan will be Head of Sponsor Coverage at Blackstone Credit in New York. His start date is to be determined. Sullivan was previously at Barclays Investment Bank for thirteen years, most recently, as a Global Head of Financial Sponsors.
❖ Timothy Sullivan joined B. Riley Securities in August 2021 as Head of Fixed Income. He was previously at Imperial Capital for two years as President. Before Imperial, Sullivan was at Jefferies for eight years as a Managing Director, High Yield.
❖ Paul Travers joined the Sycamore Tree Capital Partners Dallas office as a Managing Director in September 2021. He was previously with Onex Credit as a Loan and CLO Portfolio Manager for over nine years.
❖ Brian Van Eslander was poached by J.P. Morgan Asset Management in August 2021 from Wells Fargo Securities, where he was Head of Financial Sponsors Group. His new title is Managing Director and Co-Head of Global Performing Credit.
❖ Jess Wang has joined Brigade Capital Management’s structured credit team in September 2021, where she will specialize in RMBS and ABS Investments. Wang was previously at MKP Capital as a Portfolio Manager for eight years. Source: CreditFlux
❖ Jing Wang joined Verition Fund Management's New York office in August 2021 as Portfolio Manager. Previously, Wang was at Millennium Management as a Senior Portfolio Manager for two years.
❖ Carlos Whitaker joined Blackstone as Senior Managing Director and President, Blackstone Private Credit Fund and Blackstone Secured Lending Fund in September 2021. He was previously at Credit Suisse for twenty-one years in various roles, most recently as Head of New York and Co-Head of EMEA Equities Advisory Sales.
❖ Jared Worman is set to leave Brigade to join HPS Investment Partners, in September 2021. Based in New York, Worman has been with Brigade for over seven years, most recently as a Portfolio Manager.
❖ Adam Wueger joined Capital Four, where he will be a part of the US Fundamental Credit Research team in August 2021. Previously, he was a Director at Angelo Gordon for two years. Wueger is based in New York.
About Our DiversityMetrics™ Platform
Since 2014, Jensen Partners has tracked more than 25,000 marketing and investment moves across the alternative investment industry, which gives the firm the depth and breadth of data necessary to find the best talent and make the best recommendations. Jensen Partners has also recently invested heavily in its data capabilities by bringing in expert resources to optimize the firm's market mapping model and identify new opportunities for its clients.
In 2017, Jensen Partners began tracking the diversity of marketing talent to better meet the demand for diverse hires, and in 2021 the firm began tracking the movement of marketers specializing in ESG and impact investing. Jensen Partners makes these data and insights about trends in the alternative investment industry available exclusively in its newsletters.
We are thrilled to add another award to our collection, this time thanks to the readers of Private Equity Wire who named Jensen Partners the "Best Recruitment Company for Investor Relations & Asset Raising" for the second year in a row in their 2021 European Awards. We look forward to continuing to work with alternative investment firms in Europe and around the world, with a renewed focus on helping those firms make measurable and demonstrable progress on their diversity, equity and inclusion efforts.
Jensen Partners is a women-owned global advisory, corporate development and executive search firm specializing in the placement of leading investment and capital-raising candidates for the alternative asset management community. The firm leverages a data-driven approach to all human capital management, combining quantitative and qualitative information to source and place the best candidates for each specific role. Using the firm’s proprietary DiversityMetrics™ platform, Jensen Partners has built a database with verified demographic data (e.g., race, gender, seniority, age, education, etc.) on more than 25,000 investment and distribution professionals, providing asset managers with the breadth and depth of information necessary to quantify, measure, report and improve workforce diversity, equity and inclusion (DEI). In addition to executive search, Jensen Partners also offers LP/GP referencing, proprietary 360° Investor Referencing™, and compensation benchmarking and analysis.
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